Things are not working. Two years after the National Bureau of Economic Research (NBER) declared the recovery underway, it is clear that things are not working, at least not in the sense that most Americans expect. The U.S. economy is like an aging sports car running on three cylinders, fouled spark plugs and a flat tire.
Yet economic thinking, dominated as it is by a timid and rigid neoclassical economics, can only counsel patience. Maybe the cylinders will start firing, the plugs clean up and the tire inflate on their own. But whatever. There’s not much we can really do other than to wait for the market to work its way through the painful adjustment. This is Hoover economics. In fact, there are many things we can do to get the U.S. economic sports car back in the race.
Read the full paper here.